Best Buy signs new store-within-a-store deals with Samsung, Sony

By Adam Belz

Minneapolis Star Tribune

Posted:
05/02/2014 03:18:45 PM PDT

Updated:
05/02/2014 07:17:33 PM PDT

Sony Experience at Best Buy (PRNewsFoto/Sony Electronics)

Best Buy said Thursday that it plans a massive expansion of its "store-within-a-store" concept, with Sony opening stores in 350 Best Buy locations and Samsung adding 500 new stores to its presence within Best Buy.

The Richfield, Minn.-based retailer has been aggressively trying to remake the way it sells products, carving out space for individual brands in its big boxes in efforts to once again become a go-to destination for consumer electronics. By June, Sony, Samsung, Microsoft, Pacific Kitchen and Magnolia will each occupy its own domain within Best Buy.

"I think Best Buy is brilliant in following this strategy, and co-existing on the same distribution platform with other strong brands," said Robin Lewis, CEO of the Robin Report, a newsletter that tracks retail companies. "That big box becomes kind of an enclosed mini-mall."

Sony Experience at Best Buy (PRNewsFoto/Sony Electronics)

Samsung already sells phones, tablets, and other small tech gear at its Samsung Experience shops within all 1,000 Best Buy locations across the country. The 500 new dedicated Samsung areas will be separate and showcase the South Korean electronics giant's latest televisions, including its line of curved ultra-high-definition TVs. The company is the world's top maker of both TVs and cellphones by units.

Sony's 350 new locations within Best Buy, which it is calling the "Sony Experience at Best Buy," also will highlight home entertainment products, as well as audio equipment and PlayStations. The Japanese electronics company is the world's fourth-largest seller of TVs after Samsung, LG Electronics and TCL.

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The emphasis on big-screen televisions is a calculated move, according to Stephen Baker, an analyst for The NPD Group.

"With its new model, Best Buy is looking to redefine the mainstream in-store home theater experience, making it logical and convenient to buy all your home theater products," Baker wrote. "By focusing on the fastest-growing and highest-visibility segment of the TV market, Best Buy and its core vendor partners, Sony and Samsung, are looking to re-establish the TV section, and the home theater area in general, as a go-to place in the store to draw consumers in."

The new stores will start opening within Best Buy locations this month and should all be launched by June.

"There will be some stores that have Samsung only; there will be some stores that have Sony only; there will be some stores that have both," said Best Buy spokesman Jeff Shelman, who declined to discuss the financial terms of its deals with Samsung and Sony.

Research suggests that stores-within-a-store do more than just occupy space. A study by marketing professors at the University of Pennsylvania and Carnegie Mellon University found that the concept can boost sales of high-value products that require a degree of service that can't easily be found elsewhere in the store.

"Europe's been doing this a long time -- it's called concession retailing," Lewis said. "This is one aspect of the future of retailing, where strong brands will collaborate with each other."

Despite a disappointing holiday season, Best Buy has stabilized sales and increased its fourth-quarter online revenue by 25 percent.